Refinancing Mortgage Early in Canada

My mortgage isn't up for renewal until April 2024. It's at 3.47% with $159k remaining, but I'm seeing the rates so low so I'm curious. I did a quiz on Ratehub and it said to not switch but I'm still not sure. With penalties on breaking the contract early, any thoughts or experience in the Canadian market, specifically ON? I'm with TD but will definitely get a mortgage broker next time. 

Also, thoughts on increasing my mortgage payment weekly vs prepayment. Which is more effective? I'll probably do both once my HELOC is paid off. :)

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  • Hey there, I am in AB. We just renewed our mortgage in November and ended up doing it totally online via RBC. My husband is a real estate appraiser so he is very familiar with rates and mortgage terms. He totally drives these conversations in our house. 

    I don't think that the reduction in interest is worth the penalties and considering you only renewed two years ago. Our interest rate was similar before we renewed and I *think* we might be at 2.99% or so now. 

    One thing we did do is move to biweekly payments and synced it as much as possible to our pay periods. We get back on Fridays and the mortgage now comes out on Mondays. We were on bi-monthly but I hated the mismatch on timing. I have found that moving to biweekly ensures that we are consistently making the extra payments with no extra work on our part. And, if we wish, we can do the pre-payment but we have other higher interest consumer debt to pay off first. The only caveat is to make sure that you can afford taht increased payment on a regular basis because that is your mortgage payment now and it is non-negotiable once agreed to. If you are worried at all, then I would set up a category to regularly put the extra into and then make a pre-payment. You could even try that for a year before making the actual switch on the payment amount to confirm you can do it. 

      • Purple Foal
      • Purple_Foal.3
      • 4 mths ago
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      MadDog Thanks for your advice! I actually set my mortgage and HELOC payments from biweekly to weekly since it pays it down just that little bit quicker. With YNAB, the money is there so it doesn't make a difference to me. I was also tired of trying to "time" the payments with my paycheque so I just made it weekly the day after I'm paid.

      I'm kinda ignoring all the interest rates now since I can't change mine without a massive penalty. I've run a bunch of numbers in a spreadsheet. Once my HELOC is gone in Jan 2022 (Debt Bootcamp) and bought out my car lease in Aug 2022, then I'll have a lot more wiggle room to make lump sum payments. I agree with you about not increasing the mortgage payment amount by too much. Also, with the interest rates being low, it's probably better to invest in TFSA/RRSPs. My plan in Aug 2022, is to put half my debt snowball to my TFSA and half to mortgage lump sums. The interest rates could change in the next few years and I'd really like the boost of being mortgage free. I definitely will be getting a mortgage broker in April 2024 to get the best rate & prepayment privileges. :)

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